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2008 DIGILAW 447 (ORI)

UNION OF INDIA (UOI) v. O. C. C. LTD.

2008-06-18

S.PANDA

body2008
JUDGMENT : S. Panda, J. - The Civil Revision as well as the Misc. Appeal arises out of O.S. No. 143 of 1990-1. The Defendants are Union of India, South Eastern Railway and its officers. Opposite Party No. 1-M/s. Orissa Construction Corporation Limited, who is the sole Plaintiff, filed the aforesaid suit u/s 20 of the Arbitration Act, 1940. By Order Dated 9.3.1994, the Learned Civil Judge (Senior Division), Bhubaneswar directed Defendants 1 to 3 to produce the original agreement made between M/s. OCC Limited and Union of India. Being aggrieved by the said order, Defendants 1 to 3 have filed Misc. Appeal No. 100 of 1996. The civil revision has also been filed by the same Defendants being aggrieved by the Order Dated 20th January, 1995 passed by the Learned Civil Judge in the said suit whereby he directed that the appointment letter along with relevant documents be sent to the Arbitration Tribunal, Orissa, Bhubaneswar for adjudication of the disputes between the parties according to law. Since the misc. appeal as well as the civil revision arises out of one suit and the parties are same, both were heard together and are being disposed of by this common Judgment. 3. The brief facts, as narrated in the records, are as follows; M/s. OCC Limited had undertaken to execute certain work for the Railways on the Koraput-Rayagada railway line. As the said company defaulted to complete the work within the scheduled time, the contract made between the parties was rescinded and on such rescission of the contract, the Railways was entitled to encash the bank guarantee furnished by M/s. OCG Limited as security lot adjustment against the mobilization advanced by the Railways to M/s. OCC Limited for the work in question. 4. Being aggrieved by the said rescission of the contract, M/s. OCC Limited filed an application u/s 20 of the Arbitration Act, 1940 before the Learned Civil Judge (Senior Division), Bhubarneswar, which was registered as O.S. No. 143 of 1990-1. 5. The main contention of the Plaintiff was that the company had suffered a loss of Rs. 4,57,53,185/- and it prayed for production of the original agreement by Defendants 1 to 3 and adjudication of the disputes and differences between the parties after settling issues to that effect and reference of the matter to the arbitrator being appointed by the Court. The main contention of the Plaintiff was that the company had suffered a loss of Rs. 4,57,53,185/- and it prayed for production of the original agreement by Defendants 1 to 3 and adjudication of the disputes and differences between the parties after settling issues to that effect and reference of the matter to the arbitrator being appointed by the Court. The present Appellants-Petitioners resisted the said suit on the ground that earlier the Plaintiff had never raised any dispute or difference in writing and it had never invoked the arbitration clause coming to the Court. Therefore, there was no cause of action to file the suit. As per Clause 64 (3)(a)(iii), "no person other than a Gazetted Railway Officer, should act as an Arbitrator/umpire and if for any reason that is not possible, the matter is not to be referred to arbitration at all." Therefore, the application u/s 20 of the Arbitration Act was bad for non-disclosure of any cause of action and the suit is to be dismissed on that ground alone. 6. The main grievance of the Appellants/Petitioners is that the Court below without application of its judicial mind to the contentions raised by the Defendants drew issues on the assumption that the suit was maintainable and the dispute is arbitrable and the Plaintiff was entitled to the prayer made in the suit without any evidence adduced before it and issued direction to the Defendants to file the original agreement made between the parties on 9.3.1994. Thereafter, on 20th January, 199S it directed for issuance of letter to the Arbitration Tribunal, Orissa, Bhubaneswar for appointment of such Tribunal as the arbitrator by the Court without arty reference. As per Clause 64(3)(a)(iii) of the agreement, the General Manager, South Eastern Railways is to be appointed as the main arbitrator. As per the terms and conditions of the contract, no person could have been appointed as arbitrator and the Senior Officers of the Railways are only to be appointed as per the said clause. Respondent No. 1-M/s. OCC Limited, on the other hand, submitted that they had earlier approached the Court of law for referring the disputes to the arbitrator and obtained an interim order of injunction restraining the railway authorities from invoking/encashing the bank guarantees and the said order of injunction is still in force. 7. Admittedly, Opposite Party No. 1 raised disputes and differences. 7. Admittedly, Opposite Party No. 1 raised disputes and differences. The contention of the Appellants/Petitioners is that the Company could have approached the railway authorities for appointment of arbitrator and not to refer the matter to the arbitrator and as per Clauses 63 and 64 of the General Conditions of Contract (for short, "GCC"). As the matter is pending before this Court since long, this Court can also seek out the disputes between the parties. 8. Earlier this Court suggested the Counsel appearing for the Appellant-Petitioners to furnish a panel of names so that from the said panel two officers of the Railways can be appointed as arbitrators to adjudicate the disputes. Accordingly, the Railway authorities have filed a memo in connected M.A. No. 102 of 1996 on 6.8.2003 along with panel of names of officers who are willing to act as Arbitrators with approval of the General Manager, East Coast Railways, Bhubaneswar who is the concerned with the subject matter of the case since 1.4.2003. The parties to the disputes are the authorities under the Central Government; and State Government concerned, Therefore, this Court, without going into the arena of controversy, feels that since the dispute is pending before this Court more than a decade it will be just and proper and in the interest of justice to refer the matter to the Arbitrator as per Clauses 63 and 64 of the GCC and the General Manager, East Coast Railways, Bhubaneswar shall appoint arbitrator(s) to adjudicate the dispute as per the panel of names furnished by the Counsel appearing on behalf of the Appellant before this Court on 6.8.2003 and I direct accordingly. 9. With the aforesaid observation/direction, the impugned orders are set aside and the Civil Revision as well as the Misc. Appeal is disposed of. However, the interim Order Dated 23.8.1996 passed in Misc. Case No. 84 of 1996 (in C.R. No. 34 of 1996) regarding encashment of the Bank Guarantee in question shall continue till the matter is decided by the Arbitrator.